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We Are the Bomb: Opaque Financial Flows and Unwitting Involvement in Nuclear Armament

Nuclear armament – by consent?

We live in an age of armament. The doctrine of mutually assured destruction (MAD) – i.e. the premise of securing peace by maintaining a balance of terror – is gaining popularity again, the Intermediate-Range Nuclear Forces (INF) Treaty has been terminated, and a massive expansion and modernization of nuclear arsenals is taking place worldwide. Government spending on armaments has increased enormously, not only since Donald Trump was elected President of the United States of America. But it is fair to say there has been an exponential increase since 2017. This is particularly true for the NATO states, whose total annual expenditure on armaments has increased by more than one hundred billion U.S. dollars since then.1 One of the biggest issues here is that this has often been pushed through by parliaments against the will of the majority of the population.2 This tendency is seen not only in overall arms expenditure, but also particularly in relation to the financing of nuclear weapons to maintain or enlarge the so-called nuclear shield. For the years 2019 to 2028, a total of just under 500 billion U.S. dollars has been earmarked in the U.S budget for nuclear arms programs. This compares to around 400 billion U.S. dollars in the previous decade.3

We can observe similar developments in Europe. Based on the argument that Brexit leaves France as the only remaining Member State in the European Union with its own nuclear weapons, the French government is counting on higher spending to enlarge the arsenal, and plans to spend around ten percent of its arms budget on nuclear armaments.4 These compulsive actions also stem from a politically forced armament process that promotes a balance of terror which has now become multipolar. This can be interpreted as a continuity of deterrence through block formation, in the same way as during the Cold War. This logic also receives support from the German side, from politicians and other public figures such as Wolfgang Ischinger.5 In Germany, debates continue as to whether the German state should acquire new and costly delivery systems for the nuclear weapons stationed in Büchel. If it does so, then this decision would also be clearly against the majority will of the people. According to opinion polls, around 60 percent of people are opposed to purchasing such systems.6

This expenditure can be classified as public financing of nuclear armaments. But this is not the only source of finance that nuclear weapons producers have access to. In addition to government funding, it is also possible to raise finance via the capital markets. A large number of nuclear weapons firms obtain financing this way. The issue here is that it also involves people who actively oppose nuclear armament. In other words, we are talking about non-consensual involvement in the production and provision of weapons of mass destruction. State arms financing is subject to forces of democratic control and a certain degree of transparency in nation states that are parliamentary democracies. Yet these features do not apply to capital market based financing.

For the sake of clarity, it needs to be pointed out here that companies such as Boeing are nuclear weapons producers. Although the firm is a civil aviation manufacturer, it is also involved in developing and producing various missiles with nuclear warheads. This broad definition is important, firstly because no company in the world produces nuclear weapons on its own. All of them only produce components. While these individual parts do not constitute a nuclear threat, when put together they form nuclear weapons. Secondly, it should be noted that as soon as one part of a company is responsible for producing nuclear weapons, it is impossible – when investing in the group as a whole – to ensure that no part of the capital will be used for the armaments sector.

Financial flows in the age of passive index funds

To better understand this financing mechanism, we need to look at current developments in the global financial markets. Probably the most important change besides the steadily increasing importance of financial markets in recent years is the shift away from actively managed hedge funds toward passively managed index funds.

Until at least 2007, there was a prevailing belief in the financial markets that individual players could outperform the market average. The investment model of active funds was based on this assumption: highly paid speculators manage large amounts of capital, which are entrusted to them on the promise of above-average returns. They would invest this money in ways they thought to be particularly profitable, according to a risk profile that was in line with investors’ wishes.

As a consequence of this model becoming more and more widespread, ever more financial market players attempted to generate a better return than the market average. Things got to the point where a majority of fund providers advertised that they were better than the average. It is pretty obvious – just mathematically speaking – that this cannot work. Another disadvantage of this model is the high (personnel) costs incurred by employing extremely well paid speculators, which further reduce the return.

As financial market structures changed following the ongoing crisis of 2007, a burgeoning stream of capital was transferred out of actively managed funds and into passive funds. We are talking about a sum of around 3.2 trillion U.S. dollars in the period from 2006 to 2018.7 While this did not mean the end of actively managed high-risk hedge funds, their importance is steadily diminishing.

The term “passive index fund” covers several kinds of funds. Some of the better known varieties, for example, are exchange traded funds (ETFs) and index mutual funds. The largest providers of these services are BlackRock, Vanguard and State Street. In total, they manage assets of more than eleven trillion U.S. dollars. If you add together their portfolios, they hold the majority of shares in more than 40 % of all stock exchange listed U.S. companies.8

Unlike actively managed funds, passive funds do not bet on outperforming the market. Instead, they try to reflect the market average as closely as possible. This offers a number of advantages over the active model. Some of the most important are the significantly lower (personnel) costs and the lower risk of loss. Points of criticism include the possibility of rising systemic risk, and heavy market and power concentration among a few providers. Moreover, this mechanism leads to more complicated financial flows, and makes it more difficult to consciously invest in accordance with moral concerns, such as being opposed to nuclear weapons.

Indices, or rather representations of them, are used as a tool for making investment decisions. But what exactly is an index? Let’s take the DAX – or Deutsche Aktien Index – as an example. The DAX is a stock index that represents changes in prices in the shares of the 30 largest and most liquid stock-exchange-listed companies in Germany. It is often wrongly assumed that the performance of the DAX measures the development of the real economy in Germany. What it in fact measures is the speculative value of 30 companies that are defined by the criteria described above. Apart from the DAX, there are many other indices with a variety of different definition criteria. Some well-known examples are the Dow Jones Index, the S&P 500, the MSCI World Index, and the Nikkei 225.

It is important to realize that indices were not created along with the universe. They are the products of private index providers who decide the exact criteria and the method of calculating key indicators. This market, too, is highly concentrated. In the case of the DAX, the provider is Deutsche Börse AG.

But how does this relate to the financing of nuclear armaments? The answer is simple: nuclear weapons producers are listed in some indices. As a result, they receive considerable sums of capital from various capital management companies via the investment mechanism of passive index funds. At present, the essential part of their financing is still provided through direct loans and equity investments, but unless there is an abrupt turnaround in financial market trends, this will change in the foreseeable future. The impact of the Covid-19 pandemic on the development of passive investment cannot be predicted at this stage. At the moment, it is still relatively easy for civil society organizations that campaign for (nuclear) disarmament to identify the responsible persons and demand changes in investment policies.9 But the new complexity of passive investment creates a responsibility gap.

Another important point needs to be made here. In the course of the financialization of our economic systems (i.e. the increase in the importance and amount of financial capital), more and more businesses have been developing into capital management companies. They invest money in financial markets for the purpose of generating returns. Alongside traditional capital management companies, such as banks, an increasing number of insurance companies, governments (for example via health funds or state pension funds) and other businesses also act as capital management companies now.10 Like all other actors in the financial markets, these companies too like to invest in passive index funds.

As it is almost impossible for private individuals to track all the financial transactions and the resulting investments made on their behalf, they are almost inevitably – and possibly not consensually – involved in investments in companies whose purpose they morally object to. Of course this issue exists not only in relation to nuclear armaments. For example, it also affects people who are opposed to coal-fired electricity generation. They may support a boycott of RWE, the energy company, and yet nevertheless find that their money is made available to RWE via the route described above. RWE is listed in the DAX index, which many passive index funds follow. To make this somewhat abstract topic a little more concrete, let us take a specific example: private insurance companies in Germany.

German involvement in nuclear armaments, with the example of insurance companies

As pension provision has become increasingly privatized, the importance of private sector insurance groups has been growing. More and more people have private pensions11 as they fear that their state pensions will not be sufficient. Now let us suppose that as a private individual who is in favor of banning nuclear weapons, I want to take out a life insurance policy to protect myself against various eventualities and to back up my retirement. It is important to me to be part of a large community of insured people, as this is supposed to offer me the most security. The three largest private insurance groups by market share in Germany are Allianz AG, Munich Re and Talanx AG.

So I ask these providers about their life insurance offerings, and soon enough my research leads me to the relevant group subcompanies: Allianz Lebensversicherung AG, ERGO Vorsorge Lebensversicherung AG and HDI Lebensversicherung AG. At this point there are two scenarios. The first is that I sign a contract unsuspectingly, and thus participate in the financing of nuclear weapons. I cannot expect my insurance provider to inform me about this link, as they are not subject to any obligation to provide information.

The second scenario goes like this: before I sign the insurance contract, I am already somewhat skeptical about the investment behavior of insurance companies. On this basis, I decide to look into their self-imposed investment criteria. With Allianz AG, I quite quickly find the “ESG Integration Framework” – a document that defines the company’s exclusion criteria for investments, which take account of environmental, social and governance (ESG) issues. On page 16 of the document, I read that Allianz AG excludes investments in organizations involved in the development, production, maintenance and trading of “controversial weapons”. Since more than 80 countries have signed a nuclear weapon ban treaty, I naturally assume that this type of weapon also clearly falls into the “controversial” category. Allianz AG takes a different view. Nuclear weapons have no place in the list of controversial weapons, as I discover on page 33. To clarify: the Treaty on the Prohibition of Nuclear Weapons (TPNW, also known as the nuclear weapon ban treaty) was initiated in the United Nations and prohibits the ratifying states from testing, producing, transferring, possessing, stockpiling and using nuclear weapons.

Then I try Munich Re and soon locate their Corporate Responsibility Report, which the company publishes every year. Here too, I search in vain for a categorical ruling-out of investments in nuclear weapons. But on page 22, the company boasts that it does not invest in banned weapons. However, the list of outlawed weapons includes only landmines and cluster munitions. Biological and chemical weapons do not seem to be a problem.

So I do some research on the Talanx AG website and find out that they are committed to the United Nations Principles for Responsible Investment (UNPRI). Via these principles, the United Nations attempts to encourage capital management companies to make responsible investments, based on a voluntary commitment. Participating companies are expected to integrate environmental, social and governance (ESG) criteria into their investment decisions, and to base their own business conduct on these criteria. Regular and transparent public reporting is required, as a way of verifying and ensuring implementation of the principles. Talanx AG did not sign the principles until November 2019, however, which is why no data was available at the time of writing this text. The list of UNPRI signatories includes Warburg Invest, one of the main players in the criminal – as has now been established by a court of law – cum-ex / cum-cum fraud scheme at the expense of the German taxpayer. Merely signing the guidelines therefore does not necessarily mean that investment behavior will be guided by moral concerns, or that investments will not be made in controversial weapons. Furthermore, I cannot find a single reference in the Talanx AG Sustainability Report as to how the group conducts itself with regard to investments in arms companies.

Thus none of the three largest German insurance companies seems to have any interest in not investing in nuclear armaments. So, in keeping with my personal convictions – I decide against taking out life insurance. If I do not want to be involved in financing nuclear armaments, I really have no other choice.

With the appropriate know-how, an investigation of the investment portfolios of Allianz Lebensversicherung AG, ERGO Vorsorge AG and HDI Lebensversicherung AG fairly quickly reveals the composition of their assets. In their annual reports, all three report investments in the BlackRock Global Allocation Fund, which follows the S&P 500 index, among others. This index is provided by S&P Dow Jones Indices and includes not one but two companies that are involved in the production of nuclear armaments. One is Boeing, which also has a civil aviation unit. The other is Honeywell. Since the fund combines the S&P 500 with the FTSE World Index (and others), the nuclear weapons manufacturer Safran SA also receives capital at this point.

As mentioned earlier, as soon as I make my capital available to any part of this group, it can be used for any purpose within the company, without me having any way to influence it.

Apart from these passive investments, Allianz AG in particular also makes extensive direct investments in nuclear weapons production. It is estimated that it has investments in nuclear weapons manufacturers totaling more than 900 million U.S. dollars. Besides Allianz AG, the German capital management companies most heavily involved in nuclear armaments are Deutsche Bank (approx. $ 6,757.4 million), DZ Bank, the parent company of the Volksbanken-Raffeisenbanken cooperative banks (approx. $ 1,525.1 million), Commerzbank (approx. $ 1,322.3 million), BayernLB (approx. $ 518.6 million), IKB Deutsche Industriebank Aktiengesellschaft (approx. $ 163.2 million), Landesbank Hessen-Thüringen (approx. $ 148.1 million), KfW (approx. $ 115.1 million), Landesbank Baden-Württemberg (approx. $ 115.1 million), Siemens (approx. $ 114.1 million) and Munich Re (approx. $ 43 million).12

Against powerlessness: efforts and approaches

Given the complexity of the interrelationships, it seems appropriate to ask whether there are any promising approaches that might make the financing of nuclear weapons firms more difficult or impossible. First of all, it has to be said that the most effective and reliable way to outlaw nuclear weapons is the political one. If the years of political campaigning and persuasion achieve their intended goal and a growing number of nation states sign and ratify the TPNW, the greatest possible impact will be achieved by this means. To date, the treaty has been signed by 81 countries and ratified by 35.13 This not only prevents state financing of nuclear weapons, which makes up the lion’s share, but also sends a clear signal to financial market actors. It can be assumed that banks and insurance companies, whose reputation has taken a blow as a result of last crisis in 2007–8, have a strong interest in cultivating a positive image. Therefore, a partial retreat from financing nuclear armaments can be expected as more countries sign and ratify the ban treaty. However, this route alone goes nowhere near far enough toward the goal of cutting off funding for the production of nuclear weapons.

In addition to this approach, other steps have been and are being taken. For example, public confrontation, civil society advocacy efforts and direct talks have led even Deutsche Bank, which is known for controversial investments violating human rights14, to devise policies prohibiting investments in nuclear weapons companies. However, these consist of more loopholes than obligations, and even their implementation can be described as deficient.15 The efforts of the United Nations to create sustainable investment guidelines seem promising and have produced some success. Here a major problem with financial markets is attacked directly: the lack of transparency. Since the participating institutions are committed to public reporting, their financial flows become visible and comprehensible to a critical public with relatively little effort. They can be commented on, and public pressure can be created in this way. But there are two problems this fails to address: firstly, the ambitions of supranational institutions like the UN can potentially be undermined by stronger sovereign rights of nation states. Secondly, the approach described above is based entirely on voluntary commitments. If I have something to hide, I am hardly going to volunteer a full public disclosure of my finances. That requires public pressure on the parties involved. The International Campaign to Abolish Nuclear Weapons (ICAN), for example, has conducted an online campaign in which the Volksbanken-Raiffeisenbanken were asked to stop their controversial investments. Subsequently the banking group proudly announced new guidelines, but these did nothing to change its financial involvement in nuclear weapons of mass destruction. Although it will no longer grant project-based loans for the development of nuclear weapons, loans for “general purposes” will continue to be given to producers of nuclear weapons.

Even methods such as these achieve only limited effects. On top of this, the investment mechanism of passive index funds creates the responsibility gap mentioned above. When capital management companies are confronted with the fact that they make controversial investments in this way, they usually point out that investing in passive index funds is the norm and that responsibility lies with the funds. The funds say that they just follow indices, which they are not responsible for creating. The index providers argue that they issue different products for different needs –including indices that are subject to strict ESG criteria. It is therefore up to their clients to make this decision. There have been various attempts to create responsibility in this merry-go-round. In 2019, the Swiss Sustainable Finance Initiative (whose members manage capital of 6.8 trillion U.S. dollars) called on index providers to remove companies involved in the production of controversial weapons from their indices. The reactions to this demand could best be described as risible, and provide a deep insight into just how much this crisis-creating industry lacks any sense of responsibility.16

The situation and its structures are highly complex, the advances made so far have not been crowned with success, and they are nowhere near sufficient – especially when expected developments on global financial markets are taken into consideration. The political and social ways and means have to be exhausted, and ultimately massive pressure has to be exerted on specifically named financial market players.

Cooperation between the individual, societal and structural levels is necessary in order to demand and implement the transparency and assumption of responsibility that is called for. One thing seems obvious: the nuclear arms industry will not cease production voluntarily, just as the financial industry will not of its own accord stop investing in the lucrative sector of weapons of mass destruction. Both can only be expected as a result of coordinated, multifaceted and high-profile pressure.

At the present time, political majorities for nuclear disarmament do not exist in Germany. In any case, success on this issue can only be sought through cross-party work. Civil society organizations like ICAN carry out such activities, holding talks with politicians from different parliamentary groups to convince them of the need to ban nuclear weapons, and urging the necessary political action. This takes place from the local government level all the way up to the national, supranational and international levels. In addition, it is necessary to ensure an informed and interested public that makes its voice heard in the debate. Of course these processes would not be possible without individuals who are willing to contribute resources and take responsibility.

Financial markets and capital management companies must not shirk their responsibility toward the planet and society. Due to the lack of democratic oversight and often opaque capital flows, the demand for transparency is fundamental, as is the strict implementation of ESG criteria and compliance with them. The “Don’t Bank on the Bomb” campaign should definitely be mentioned in this context. For years, it has campaigned for divestment from nuclear weapons. Its means to achieving this objective include research into financing relationships, publications, and direct talks with financial market institutions. But since it is not only selected banks but also, as shown in this article, a large number of capital management companies who are involved in financing nuclear weapons, they must be forced to assume responsibility for independently, fully and transparently informing their customers about controversial investments in their products. This is the only way to ensure that individuals are not unknowingly and often unwillingly involved in financing nuclear weapons. However, pressure is required from individuals, who must switch to a bank that has a moral compass, and which must demand changes in investment policies and transparency from their insurance companies

Let us be clear: Covid-19 shows us that our society’s resources must not be invested in weapons of mass destruction. They are urgently needed elsewhere.

1 NATO Public Diplomacy Division (2019): Defence Expenditure of NATO Countries. Brussels, p. 7.

2 Körber Stiftung (2019): The Berlin Pulse. Hamburg, p. 37.

3 Reif, Kingston (2019): “Trump Budgets Boosts Nuclear Efforts.” (accessed March 5, 2020).

4 Granholm, Niklas; Rydqvist, John (2018): Nuclear weapons in Europe: British and French deterrence forces. Stockholm, p. 64.

5 N-TV (2019): “Neue Strategie der Abschreckung: Frankreichs Atomwaffen sollen EU schützen.” (accessed April 29, 2020).

6 ICAN Germany (2019): “Umfrage: Deutsche gegen neue Atombomber”. (accessed March 5, 2020).

7 Petry, Johannes, Fichtner, Jan and Heemskerk, Eelke (2019): “Steering capital: the growing private authority of index providers in the age of passive asset management”. Review of International Political Economy., p. 2 (accessed March 6, 2020).

8 Fichtner, Jan, Heemskerk, Eelke and Garcia-Bernardo, Javier (2019): “BlackRock, Vanguard and State Street own Corporate America.” (accessed March 9, 2020).

9 Beenes, Maaike (2019): Beyond the bomb. Global exclusion of nuclear weapon producers. Utrecht.

10 Sahr, Aaron (2017): Keystroke-Kapitalismus: Ungleichheit auf Knopfdruck. Hamburg, p. 24.

11 German Federal Ministry of Labour and Social Affairs (Bundesministerium für Arbeit und Soziales) (2020): “Statistik zur privaten Altersvorsorge (Riester-Rente).” (accessed April 29, 2020).

12 Beenes, Maaike (2019), pp. 72-89.

13 ICAN Germany (2020): “Positionen zum Atomwaffenverbot.” (accessed April 29, 2020).

14 Facing Finance (2020): “Schlagwort-Archive: Deutsche Bank”. (accessed April 29, 2020).

15 Beenes, Maaike (2019), p. 46.

16 Rust, Susanne (2019): “Index providers respond to controversial weapons campaign.” (accessed April 29, 2020).


Robin Jaspert

Robin Jaspert studies political science, ethnology and economic sociology at the Goethe University Frankfurt am Main. His main areas of study are the structures of financial markets and their social consequences. In addition to working as a research assistant at the Chair of International Relations and International Political Economy, Robin Jaspert is active in several social and peace policy organizations, including as an ambassador for ICAN – the international campaign to abolish nuclear weapons.

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All articles in this issue

The End of the "Interlude" – Nuclear Deterrence in the Light of Roman Catholic Social Teaching
Heinz-Günther Stobbe
Waiting for Armageddon: Theological and Ethical Aspects Of Nuclear Deterrence
Drew Christiansen SJ
The Relevance of the Heidelberg Theses today
Ines-Jacqueline Werkner
Exposing Flaws in the Logic(s) of Nuclear Deterrence as an International Security Strategy – a Feminist Postcolonial Perspective
Madita Standke-Erdmann, Victoria Scheyer
We Are the Bomb: Opaque Financial Flows and Unwitting Involvement in Nuclear Armament
Robin Jaspert
Extended Nuclear Deterrence and Participation: Overcome Together, Don’t Go It Alone
Wolfgang Richter
Nuclear Arms Control, Disarmament and Nonproliferation Regimes in Deep Crisis
Tom Sauer
"No Way Out": Nuclear Weapons Remain An Important Factor in International Politics
Michael Rühle
Russian Nuclear Weapons: Reason or Feelings?
Konstantin Bogdanov
China’s Nuclear Strategy in a New Geopolitical Environment
Sven Bernhard Gareis


Markus Bentler Burkhard Bleul